con welcome to all the parts in general and the trumpet ministration in particular i'm never shy of extolling that i cannot make achievements and that's without merit the american economy of late has indeed been looking great but there is an increasing number of economists who claim that these boom may be short wave and the setting the stage and not the global crisis if the full indeed comes how hard is it likely to be able to discuss that i'm now joined by rose a founder and c.e.o. at the rose and roubini associates mr rose it's good to talk to you thank you very

much for your time thank you for inviting me now over the last couple of weeks we've heard a number of prominent economists warn that the global economic growth may be slowing down but i think you've been the most passive mystic of all predicting a new global crisis around two thousand and twenty doc may be similar in scale and perhaps even wars than the one we saw in two thousand and eight is that still a possibility or already a certainty no of course is probabilistic a session in the sense that it's out of time just to make sure that the. federal budget doesn't completely exposed explode and therefore they tend to expire i was the end of next year and that is when we fear. some negative impact. on the us economy because the effects of this start scots taper off and you my face. if you scope cliff but it's not just about the tax cuts there was also

additional spending as i said and i think this claim of the stimulus program was ill timed and may have said not only trump supporters but also some people on the democratic side who claimed that if there's anything good to come out of the trumpet ministration on the economic front it was proving that fiscal stimulus actually works when the labor market is short of its full potential as was the case in two thousand and seventeen don't you think that the growth in the job numbers counterbalance or justified the negatives that you mentioned like for example the inflationary pressures is always good to you know have more jobs than less jobs but the unemployment rate is now below four percent when nobody really knows where denied to ease my v four and a half or around there so we had already below do not for

a rate of unemployment therefore of course our job. is a good one but then you have to counterbalance what instruments you're using. against that he solved if you actually achieve in terms of voter will see my gain a few more quarters of positive growth a few more hundred thousands of jobs but then what happens to inflation and what happens to the reaction of the central bank to beas inflation because the central bank needs to make sure that. inflation remains on target and we already see that these are both good and then when they are then you start having parked on everything else we discussed on investment potential because interest rates are high. growth and eventually on employment so that's why you tend to use fiscal policy. in

a counter secret. come on now i know that you are partial to the financial instability hypothesis which essentially posits that different gillett see all of the system increases in good times partly because economic actors don't want to upset growth even when they realize that it may not be our gammick or sustainable how much does it apply to what you now see the american economy and would you go as far as to say that the current flies right now the harder they fall is going to be in two thousand and twenty yes that tends to be the case and you mention correctly hyman. financial instability hypothesis which is somehow still ducks although is being increasingly accepted the monk mainstream economists in two thousand after the two thousand and eight crisis effectively things get to incrementally war single times and people tend not to realize that

the number of positions because. expose your vote will trust speculative do. it and then eventually when something happens and the something tends to be an increase in the interest rate that goes beyond a certain point then you tend to have. a high you of being then more severe the downturn tends to be now is study clearly when the fed has increased rates that a short period of time from the peak at a session a contraction or a modest slowdown as always occurred and it would be quite unusual if were these were not to be the case especially because nobody really knows where the. level at which interest rate because three liver stick now has spent the last couple of months and well almost a year already extolling he's administration economic genius the job growth the economics. mansion and he's sickly on the willing to share any of the credit with

the previous administration but i wonder if this next crisis as you predict come wouldn't be fair to blame it exclusively on him no i look at it is like a question of blaming people a lot of ministrations. even perhaps policies we leave. history. told us time. after the two thousand and eight two thousand and nine crisis. fed to the government that became a democratic administration at the point. in part of why to some stun shows stimulus both in terms of monetary easing and in terms of fiske of easing and the combination of the two in fact work plus the symbolisation of the banking system by a somebody such as the dog and so on so these policies of work to because

the economy has recovered and recipe somehow is worth the work a little less so in other countries what part of decisive b. was not apply this particular to fiscal stimulus so it's very hard for any politician of any color mania ministration to stop the pot of tea when he's going in for the pot to go on tina's longest possible what we claim is that the market forces a soft touch the divine surely. downturn because inevitable whatever day i mean a station in whatever they call it of by i mean a station might be now mr rosen i know that you also contend that if these benefits storm hits the policy tools available to the current administration for addressing it will sorely be lacking why is that. more than locking i would say be. rained well down the globe because so know what this cold policy space

my be. reduced to only can be reduced because just think about just to make a very simple example. u.s. fed that has interest rates they started to five twenty five because before the previous crisis they teach the truly zero and the maybe they are going to go up to say three three and a half percent you can see already that the fed has less room to cut interest rate that's already a deduction in policy space the balance should be below to relieve. q.e. and now the programs from the fed to. the four or five trillion us dollar remains below that inspired of the form to tightening fiscal space in most countries start to defy to the last crisis we that to g.d.p.

ratio of our of thirty forty fifty percent only some then that the countries stuff there from a higher level but most countries now have been debt to g.d.p. nation in the hundred percent space the us being one but that would be fronts it could be day u.k. could be other countries that have been virtually. been fiscally beatrice in that in the past so once they have to up lie those instrument fiscal and monetary policy they might find less and less policy space in other jurisdictions and in particular in europe then it has been a song to some phone involved against the dipali says that what i'm up to to find a crisis in particular their standard to measure is that what i know that which means that if more of those policies were to be adopted into. nations

mine not be as innocent as they were going to cost mr rosen let me stop you for a second here because we need to take a very short break but i hope we will come back to this discussion and look into the implications of that potential economic crisis a bit more states. join me every thursday on the alex salmond show and i'll be speaking to guest of the world of politics or business i'm show business i'll see you then.

welcome back to worlds apart with brindle of rosa founder and c.e.o. of rose and roubini associates mr rose. just before the break we were discussing this very gloomy scenario that you painted out and i heard you say that if. indeed happens the political implications in the two thousand and twenty electoral year could be massive especially taking into account the character of the current

american president what is your worst fear is not just. is not just in the us in a number of countries political developments have shown a very different direction from the past now regarding the u.s. we have one of the there my be contributing to a potential severe downturn is the possibility that other presidents facing a potential. economic crisis tend to turn their instruments to gather consensus around them that has been in a number of times in the past and by other instruments i think you mean the some sort of a. foreign policy crisis and in your article specifically you mention iran as a as a potential target right exactly because what i was about to say is that presidents

can work effectively all on a trait migration foreign policy and defense almost without. necessarily consent of congress and congress by the time might be divided the not necessarily of the same call of the president in which case having going to work a lot on trade and migration is the finance and foreign policy they instruments that are mains in the hands of the president and therefore in my be tempted to some form of. intervention in the middle east being a potential target there you build respect for all he's a legit recklessness an impulse to tromp is the first president that hasn't initiated a new conflict that the first president and i think three day kate and even when it comes to syria he said to me bomb syria but the russians would tell you that it was done in a very careful in

a very limited manner what makes you believe that trump would indeed move from he's been bastid threats to the actual bombing because so far he hasn't done it and in fact in my knowledge we are talking about a probabilistic scenario here and in my waiting some friends here everything we are saying and i'm out of assumptions that we are making on all then be firm fronts and is the community being of them the might be. resulting in the severe downturn that we are discussing foreign policy from the us is one of them but not necessarily a de only one in fact the allies that are gaining gaging a medic. troops seeing the least off that having taken to withdraw from them my not be as pages and initially. you know appearing and therefore in my no go

for that we're just saying that is that's an option on the table historically leaders do you indeed look for distractions abroad because that's where it's easier to find anime is to blame but trump is unique in having no shortage of anime is at home one of be easier and perhaps more logical for him to blame all the potential failures on saboteurs at home like for example the fat definitely and that's not excluded at all in fact we were seeing that. already some bro saw him of the. rule and saw no commenting on what the fed has done by making him some statements about what the fed. should do. in order to allow the u.s. economy to grow even faster potentially if that if you did so when rates were

barely at two percent and growth was three percent unemployment falling you can you can imagine the kind you can use when the economy mind is lowering down interest rates will be between three and perhaps three and a half percent and unemployment at ops on these way yeah you can you can definitely see how we can increase that i totally against the fed don't bet the potentially congress again if you get. out of it in the hands of the democrats that meet them elections now as the end of last year about half of the u.s. is public data was owned by foreign investors mainly china and japan given tromps post on trade with china do you think beijing or even toll killer. may change the strategist with regards to the american holdings. it's very hard. to have a new day in and out in your article that the idea of bailouts will be particularly

intolerable in the countries with resurgent populist moments but these kind of populism is self-contradictory because people suddenly don't want national money to go into saving big banks but they also don't want to see their savings evaporate do you think governments even the populists governments can really afford not to be populist in the sounds of providing some sort of a curse for the population in dealing with the banking situation yes you pointed out correctly. contradiction in. economic positions it's easy to find an enemy where the fault in the way of their. political opponents and so on that's much more difficult to explain how things are once you start telling people look you my hate the banks but where do you put your

money. you put them in the bank and what happens if the bank goes on and you don't see your money anymore now you want me to intervene ok so these kind of reasonings would be much more healthful to make people understand a real dynamics there and why people locked on consequences of crisis that of khowst nobody wants a different story is one thing the right thing research shows that for every nine executions one convict is found innocent the idea that we were executing innocent people was terrifying is just no. and that we were even many of the times families want the death penalty to be abolished. the death penalty here is because that's what murder victims' families want that's going to get in peace. it's going to give them justice and we come and say. not quite enough we've been through this this isn't the way.

oh right unless you get a. liminal before good your. drama appear edge of space to astronauts are forced to make a limb or urgency escape following the failure of their launch rockets leaving relatives on the ground with and i just wait for news. and you was more than up a couple of hits that you can be ready for that. cosmonauts are prepared they get trained but the wife just stay down here and worry. they post war future of the controversial syrian rescue group the white helmets causes the vision

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